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D1. Suppose that the Federal Reserve Bank buys $130 million worth of securities from the non- bank public, who then deposits
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Answer #1

reserves; exactly $130 million

Explanation: Every time a dollar is deposited into a bank account, a bank’s total reserves increases and money in circulation decreases. Since, there is no commission, charges, fees etc. associated with the above event, reserves will exactly rise by $130 million, no less or more.

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